Reality bites for Wall Street Journal sellers

The Bancroft family's worst fears have come true: Rupert Murdoch has taken full editorial control of the venerable newspaper.

A shakeup at the top of The Wall Street Journal shows that Rupert Murdoch is firmly in charge.

NEW YORK (Fortune) -- Rupert Murdoch has made the former owners The Wall Street Journal look foolish.

On Tuesday, a key Murdoch deputy, Robert Thomson, was installed as the Journal's highest-ranking editor - just weeks after his predecessor, Marcus Brauchli, was unceremoniously
nudged out.

The moves suggest that Murdoch has failed to live up to a key condition imposed by the Bancroft family, the former controlling shareholders of Journal parent Dow Jones, when it
sold him the paper last December for $5 billion: To allow a special committee to help guard the Journal's editorial independence by giving it a voice in the hiring and firing
of the paper's top editors.

As the Brauchli-Thomson switch shows, Murdoch has turned that approval process into a farce. No doubt we'll hear shortly from some media watchers, maybe even a Bancroft or two, about
how Murdoch has reneged on his promise and how selling the Journal, one of the world's top newspapers, was a mistake.

But don't feel bad for the Bancrofts. They deserve this. Truth is, they were sub-par owners.

The Bancrofts' big mistake is that they liked to promote the Journal's top editors to the job of Dow Jones CEO. This pattern guaranteed that the Journal remained a fine
paper, but not a great company. During the 15 year reign of editor-turned-CEO Peter Kann, for instance, Dow Jones' total return to shareholders was 109%. By comparison, the New York
Times Co. (NYT) and the Washington Post Co. (WPO) delivered returns of 228% and 368%, respectively. By the time the Bancrofts replaced Kann in 2006
with a business side guy, the damage was done.

Not surprisingly, the Bancrofts were eager sellers when Murdoch came along. But they felt guilty about taking billions from the company that also owns the New York Post. They
wanted to look like good people, too. So they made Murdoch agree to create the special committee. It seems obvious now that the News Corp. (NWS, Fortune 500) chief had every intention of putting his own people in place at
the Journal.

He didn't have to wait long. He created a small public relations snafu by neglecting to consult the special committee about Brauchli's resignation, which by all accounts was forced,
in April. Journalistic watchdogs harrumphed. So did Bancroft family members. On Tuesday, Les Hinton, Dow Jones's CEO, issued an unusual public mea culpa: "In hindsight, we recognize
it would have more been appropriate to have advised the Committee in advance of reaching an agreement with Mr. Brauchli. We have apologized to the Committee members."

But Murdoch didn't make the same mistake twice. He kept the committee in the loop about Thomson's promotion. And guess what? The committee gave the former Times of London
editor its blessing - and with it, delivered the message that Murdoch's in charge now. The committee itself noted in an op-ed piece in Wednesday's Journal that it "was advised of this
choice in the timely fashion, has considered Mr. Thomson's credentials and had voted to approve the appointment."

So Brauchli's out; Thomson's in. Murdoch must be pleased. The Bancrofts probably feel differently. But it's too late for them to complain now. If they didn't want Murdoch to have his
way, they never should have parted with Dow Jones.